Technical Note---On Optimal Policies for Inventory Systems with Batch Ordering

Authors:
Woonghee Tim Huh;Ganesh Janakiraman
Affiliations:
Sauder School of Business, University of British Columbia, Vancouver, British Columbia V6T 1Z4, Canada;Naveen Jindal School of Management, The University of Texas at Dallas, Richardson, Texas 75080
Venue:
Operations Research
Year:
2012

Citing 7
Cited 0

An inventory model with limited production capacity and uncertain demands. II. The discounted-cost criterion

Mathematics of Operations Research
Inventory control in a fluctuating demand environment

Operations Research
Optimal Policies for Multi-Echelon Inventory Problems with Batch Ordering

Operations Research
All-or-Nothing Ordering Under a Capacity Constraint

Operations Research
Optimal Control of Serial Inventory Systems with Fixed Replenishment Intervals

Operations Research
Optimal Policy for a Multiechelon Inventory System with Batch Ordering and Fixed Replenishment Intervals

Operations Research
Optimal and Heuristic Echelon (r, nQ, T) Policies in Serial Inventory Systems with Fixed Costs

Operations Research

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Abstract

We study a periodically reviewed multiechelon inventory system in series such that order quantities at every stage have to be multiples of a given stage-specific batch size. The batch sizes are nested in the sense that the batch size for every stage is an integer multiple of the batch size for its downstream stage. The problem is that of determining the policy that minimizes the expected discounted sum of costs over a finite horizon. The result is that an echelon (R, nQ) policy is optimal when demands are independent across periods or, more generally, Markov-modulated. We also comment on algorithmic implications of our result and on extensions.